Germany: The Premier League In Textile Machinery Production

Jürg Rupp, Executive Editor

For decades, Germany has played the major role among the top textile manufacturers in Europe. In
terms of volume, the Association of Italian Textile Machinery Manufacturers (ACIMIT) may have more
members, but Germany has the largest turnover. In an exclusive interview with Textile World, Fritz
P. Mayer, Chairman of the Textile Machinery Association within the German Engineering Federation
(VDMA), explains the reasons why.

The foundation for VDMA was laid in 1890 with the founding of the Verein
Rheinisch-Westfälischer Maschinenbauanstalt. Up to 1945, the association of textile machinery
manufacturers was based in Saxonia, which at that time was the center of textile machinery
manufacturing. In 1945, it merged in Frankfurt am Main with other machine building groups within
VDMA.

VDMA, a private nonprofit organization, represents more than 3,000 member companies in the
engineering industry, and is among the largest and most important industrial associations in
Europe. The textile machinery association within VDMA has 120 member companies, which represent
approximately 95 percent of Germany's total production volume in this field. Most of the member
companies are medium-sized businesses.

Fritz P. Mayer, chairman, VDMA Textile Machinery Association

Main TargetsTW: What are the main targets of the association?Fritz P. Mayer: The main target is to represent the interests of these companies
on both the national and international level. Current focal points of the representation work
include:

labor market and pay policy, and deregulation;

education policy, attracting new generations;

tax, research and technology policy;

corporate financing and trade policy;

environmental and energy policy; and

trade fairs/trade and related policy.

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TW: What are the association's achievements?Mayer: The VDMA lends a powerful voice to the views of its members. It is hard for
a single company to assert itself toward all the target groups linked with the topics mentioned
above.

ActivitiesTW: What are the activities of the VDMA Textile Machinery Association?Mayer: Since the textile machinery sector is an export-driven branch, sales
support is a key activity. We are very active in organizing symposia and conferences in major
textile markets. On the occasion of these conferences, German companies present their latest
technologies to high-ranking technical experts and decision makers from the respective textile
industry. The lectures are completed with business-to-business meetings and panel discussions on
core topics — for example, sustainability or life-cycle costs.

The last VDMA conferences took place in China and Turkey in 2012 and Indonesia in April
2013. The next conference will be in Bangladesh. The VDMA member companies will address the
specific tasks of Bangladeshi textile companies November 5-6 in Dhaka.

I would also like to mention the VDMA activities for attracting young professionals. With
the Walter Reiners Foundation, the VDMA Textile Machinery Association is actively engaged in
promoting junior engineers. Each year, the foundation provides an incentive for top performers by
granting two promotion prizes for dissertations and master/diploma theses as well as one creativity
prize for seminar papers. Students regularly gain an insight into practice via excursions to member
companies and to the leading textile exhibition ITMA, which are financially supported by the
foundation. Particularly high-performance students are supported by scholarships.

TW: How are these activities organized?Mayer: All activities are organized in cooperation between the VDMA office staff
in Frankfurt and the respective committees of the association. Today, the Textile Machinery
Association has five regular committees. The Executive Board is the most important panel within the
association. There are 15 managing directors on the Executive Board, representing each branch.

The fair and marketing committee presently consists of 13 marketing and sales representatives
from different member companies.

The textile machinery industry is a technology-intensive sector. The Technology and Research
Advisory Board advises member companies on technical matters as well as on research, legal
regulations and standardization. Actually 21 managing directors, research and engineering managers
of the member companies take part in the opinion making.

The board of the Walter Reiners Foundation, consisting of five managing directors, is guiding
the activities related to junior engineers.

Three years ago, a China Management Meeting was created as a body of branch managers of German
companies in China.

Notably, the Textile Machinery Association does participate in the VDMA representative offices
in China, India and Brazil, which are of great help in organizing trade fair participations or
other events in the respective countries.

The Chairman's FocusTW: What is the main focus of the chairman of the VDMA Textile Machinery
Association?Mayer: The main focus of the chairman is to represent the interests of the branch
toward a variety of groups: trade fairs, customer industries, politics and administration, and
others. Together with the colleagues from the Executive Board and the managing director of the
association, the chairman guides the policies and activities of the association. The chairman is
also a member of the European umbrella association CEMATEX [the European Committee of Textile
Machinery Manufacturers].

TW: What instruments do you have in your organization to achieve these
targets?Mayer: Pragmatism! In an export-driven industry like our business is, most
activities are on an international level, which means that you have to deal with so many different
cultures, mentalities and, of course, interests. A good dose of pragmatism is of great help to
achieve the targets.

TW: Why should a German textile machinery manufacturer be a member of VDMA?Mayer: First of all, there is the networking aspect. VDMA offers exclusive
platforms to network with colleagues from other machine manufacturing companies and even customer
industries. The networking argument applies not only to CEOs and management topics, but also to
different levels and various issues. It is always useful to exchange views with other companies and
to learn how they are meeting challenges or taking advantage of opportunities.

TW: What are the main advantages of being a member of VDMA?Mayer: Besides networking, it is noteworthy to mention the huge service portfolio
and expertise VDMA offers exclusively for member companies. There are experts for law, economics,
statistics, taxes, research and technology, just to mention a few. Not to forget data and market
information — those are of great help for planning and doing business.

TW: Is there a technical textiles and nonwovens group in VDMA?Mayer: Not for technical textiles and nonwovens in general. But VDMA founded the
Composite Technology Forum in 2010. The forum seeks to be an interface between the skills of
machinery manufacturers and the needs of industries using fiber composite materials. It aims to
bring about cooperation and exchanges among associations, clusters and other customer industry
organizations. The objective is to create a close network among the players.

TW: VDMA is one of the most active bodies of the European textile machinery
industry in terms of participation, etc. What are the reasons for that?Mayer: One reason, of course, is the size of the industry. But I think it has also
to do with the corporate culture of VDMA. It is not a pure federation, but an association service
provider.

TW: What advice do you have for an interested party or producer of this sector's
products to make contact with its members?Mayer: A helpful tool is definitely VDMA's internet portal for the customer
industries: machines-for-textiles.com. The sourcing service on this website helps to find products
and technologies for the textile industry. Visitors to the sourcing service are assisted by a broad
range of search possibilities like free text search, company name or location search, hierarchical
search for categories of textile machinery and accessories, as well as hierarchical search of
textile products for which production technology is requested.

TW: How difficult is it for the chairman to integrate all individual group
members?Mayer: Of course, 120 member companies from different subsectors do not
necessarily share the same view on every issue. On the Executive Board, all subsectors are
represented: machinery for spinning, chemical fibers, nonwovens, weaving, knitting and hosiery; as
well as for finishing including washing, bleaching and dyeing. We have regular board meetings, and
one time a year, the so-called textile machinery forum with all CEOs of the branches. So there is a
regular exchange among the chairman and the other entrepreneurs. We have a saying in Germany: You
can't please everybody! However, due to the regular exchange, it is possible to defuse potential
conflict and to develop strategies and policies that are shared by the vast majority.

The DifferenceTW: How would you describe the difference between textile machinery products
manufactured in Germany and those from other countries?Mayer: The experience of many German companies shows that textile mills are
increasingly looking at the life-cycle costs of machines. The reason behind this is that the
investment costs represent only about 10 to 50 percent of the overall costs that occur during the
entire lifetime of an investment good, but as well for a shorter time. Therefore, mills are
increasingly looking at the accumulating costs over the life cycle in a textile mill — and, there
are many expense factors to examine: costs for acquisition, installation and startup. There are
costs that are often not transparent at first glance: costs for maintenance, service and repair —
but also for energy and operating, the influence on costs of raw materials like fibers and yarns
and the production waste, environmental costs, costs for unscheduled repair, disposal, staff and so
on. To put it in a nutshell: The initial price for a German machine pays off after a few years due
to low maintenance costs and reliability in production. So far, only a few suppliers can compete
with this superiority and advantage of German technology.

TW: Why do you think VDMA is the biggest association within CEMATEX?Mayer: "Big" has several aspects: In terms of member companies. ACIMIT is the
biggest association in CEMATEX. But in terms of production and export figures as well as market
share, VDMA is the biggest association. The reason is simple: the German textile machinery industry
is the only one in Europe that covers machinery for the whole textile chain from spinning
preparation to finishing, while other associations cover just some sectors.

Market SituationTW: How do you see the current market situation in general?Mayer: In general, I'm satisfied with the current market situation. Germany still
has a strong economy and is less affected by the sovereign debt crisis compared to other countries
of the Eurozone. Until now, the crisis had no severe consequences for the member companies, as our
industry predominantly exports its products outside the Eurozone.

TW: How do you see the current market situation for your member companies?Mayer: Since the end of last year, the business climate has noticeably improved.
The order income in the first two months of 2013 was 11 percent higher compared to the same period
in 2012. In February, the increase was even bigger, with a plus of 29 percent. For the coming
months, I see good business prospects.

TW: Where are currently the most significant markets for your member
companies?Mayer: The big five in 2012 have been China, with exports totaling 1 billion
euros; Turkey, 350 million euros; India, 240 million euros; the United States, 170 million euros;
and Indonesia, 120 million euros. The exports to Indonesia increased by 132 percent. Among the top
ten, it's worth mentioning Bangladesh, with German exports worth 50 million euros in 2012.

In 2012, the total exports of German textile machinery reached 3.1 billion euros. That was a
decrease of 5.5 percent year-on-year. The year 2012 was no record year, but, in general, business
was on good level.

The FutureTW: Where do you put the main focus on VDMA's activities in 2013?Mayer: As I already mentioned, sales support in major textile markets is an
integral part of VDMA's activities. Another focus is sustainability. Sustainability has been a
loosely used watchword in the past. But today, it is a competitive factor: Volatile prices for
commodities and for energy are obviously worrisome signs for textile manufacturers in almost all
countries. In the framework of the VDMA Blue Competence sustainability initiative, we will show
textile manufacturers exactly how to realize substantial raw material and energy savings with the
help of German technology. The success stories from member companies are themed "Sustainability
Meets Profit."

TW: How important is the technical textiles market for your member companies?Mayer: Nearly all member companies of the association have in their portfolio,
among other products, machinery and/or components for the production of technical textiles. Some of
them are doing a substantial part of their sales with these technologies. For others, the
contribution of this machinery to overall sales is small at the moment, but for them, the objective
is clear to increase this share. Other members are completely focused on the nonwovens machinery
sector.

TW: Where do you see the most important markets for your member companies in the
next few years for apparel, technical textiles and nonwovens?Mayer: Very broadly speaking, today, the markets for apparel are mainly in Asia,
while technical textiles and nonwovens are mainly produced in Europe and North America. For the
garment sector, changes are already being noticed. Due to the increasing labor costs in China, the
dominance of China in apparel production will decrease. Of course, the country will continue to
play a major role in apparel production, but countries like Indonesia, Vietnam and Bangladesh will
also get their pieces of the pie. For the years to come, I expect a growing production volume of
technical textiles including nonwovens for industrial and medical purposes in China and India.
Suppliers to the automotive industry or manufacturers of medical and hygiene textiles are important
customer branches, and these sectors are growing in the two big Asian countries.

Ongoing LeadershipTW: The German suppliers are considered to be market leaders in some segments. Why
is this, and what do you plan to do to keep them in this market position?Mayer: Frankly speaking, it's the knowledge portfolio that preserves the
technological leadership of German suppliers. Copycat machines may look very similar to the systems
they are designed to emulate, and they are a price class cheaper. But all too often, they merely
prove the truth of the German proverb "Buy cheap, buy twice." Only the original designers have the
expertise and know-how to coax the last ounce of performance out of the system. Many batteries of
tests are needed before the machines, components, sensor systems and electronic controllers are
perfectly synchronized, so that the desired product quality is achieved all the time, even at
maximum working speed. This insider knowledge is hard-won. The engineers gradually gain an
understanding of the internal workings of a machine, how it responds to external stimuli, so that
they can then implement new functions on it. This works because of the permanent high research and
development expenditures of the German textile machinery companies as well as the quality of German
universities. Renowned institutions like the Institute of Textile Technology at RWTH Aachen
University (ITA Aachen), Institute of Textile Machinery and High Performance Material Technology at
TU Dresden (ITM) or Institute of Textile Technology and Process Engineering (ITV) Denkendorf —
among others -—have always produced highly qualified engineers who have the know-how that it takes
to convert the results of scientific research into marketable textile machinery.